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Kodak's Final Act: An Ode to Theory Z

On Sunday, The Financial Timesreported that the recent drop in Eastman Kodak’s share prices may be the final, overt sign that the photography giant is nearing its end.

For a company that spearheaded innovation—in 1885, founder George Eastman invented roll film, which benefited the motion picture industry and inventor Thomas Edison—the only sign that may be left that Rochester, NY, was once the home of something great sits midway down East Avenue where the George Eastman house sits.

In the late 19th century, Eastman sparked up an idea and a patent before dashing to market. A blue-chip, global enterprise once valued at an estimated $200 billion is now a pale contrast of its former self. On Friday, Eastman Kodak shares were valued at an estimated 54 cents per share, losing half of its value in a single day.

So what happened? Kodak competitor Fuji is still profitable and cash flow is healthy.

The answer may be in Kodak’s embedded culture of over-greatness. Over-greatness is a pet name I have given to the phenomenon plaguing Kodak—when a majority of people in an organization are feeling and acting over-inflated to the point of insularity.

By sequestering itself, the organization created the anti-culture of success. The culture it carved out disabled "fresh," innovative thinking. Product development, for example, requires market engagement. Kodak didn't even attend the Consumer Electronic Show (or CES) until 2004—amazing evidence of their lack of consumer orientation.

My suspicion is that Mr. Eastman—Rochester’s dear friend and philanthropist who built up the University of Rochester with his kind donations and redid the Cambridge campus of MIT—is spinning about in his afterlife, if you believe in such a place. Imagining him right now fuming or simply shaking his head in disdain is all I can envision.

Culture is powerful; it is behavior bending and can be fatal. For Eastman Kodak—a company that was once rich with entrepreneurship and mission—time has ticked by. Disruptive cycles are required these days to spark creativity and new product proliferations.

The days of Theory Z—the days prophesized by psychologist Abraham Maslow—are here. According to Maslow's book, Maslow on Management, "Theory Z presupposed that people, once having reached a level of economic security, would strive for a life steeped in values, a work life where the person would be able to create and produce."

Kodak’s culture seems to have worked against Theory Z. Leaders and managers may be rich in value-based living but, without creating, companies fade from our minds and new replacement products take their place.

Some may say Kodak’s high level of quality and over attention to perfection prevented product development, but I posit that its culture of insulation drove it to be worth a mere 54 cents per share on Friday.

It's a sad day in Rochester, NY. For me, the University of Rochester was my springboard to finding value in psychological research connected to motivation theory and organizational development. That experience would not have been possible without the generosity of Mr. Eastman. His grants fueled a majority of my education in New York—thank you, George.

Let’s be sure, folks, that next time we find another Eastman, we encourage his new organization with systems knowledge, cultures research, collaborative practices and leadership that encourages participation from outside and inside the company.

It's amazing that we can have a technology company last 119 years without such thinking, but Kodak is a pretty strong case that it can happen—for a while, not forever.